Buying in 568 Collins st tower?

[joelucie]

looking at http://www.skyscrapercity.com/showthread.php?t=1130541
and was told the L12-L18 apartments are on pre-sale now. ~$380k 1 bed and ~580k 2 beds+ a carpark. it could be completed by mid 2015!

should i buy one in this outstanding skycraper with taking a risk of 10% case on hold?

 

[Propertunity]

should i buy one in this outstanding skycraper with taking a risk of 10% case on hold?

Your 10% deposit is not the only thing at risk.

In 2015 when it comes time to pay the balance, if the unit is not worth what you agreed to pay for it in 2010, and you decide not to proceed, then the developer can (& will) sue you for the difference in what they eventually sell it for and what you agreed to pay now.

You also have a credit risk. What if the lenders won't give you 80-90% finance in 2015? What if you are out of a job for a few months and can't get credit.....and so on.

You might consider these risks acceptable - if so, go for it. Personally if I had a spare $38K or $58K, I could be doing deals with it right now and making money, not tying it up for 5 years on a maybe.

 

[The Y-man]

The 10% deposit is at incredible risk if the place is not up for sale and someone is trying to sell it to you!

The Y-man

 

[joelucie]

thanks for your guys' opinions. looks like 10% deposit is a big risk. the other thing I'm worried about is do we have any oversupply problem in the city in a few years.

 

[The Y-man]

thanks for your guys' opinions. looks like 10% deposit is a big risk. the other thing I'm worried about is do we have any oversupply problem in the city in a few years.

I don't think there would be really an issue with oversupply. CBD living is something busy working singles and couples seem to find convenient.

I would be more concerned about ongoing maintenance costs (people are tired of me talking about lifts - in that building, there could be a $500,000 maintenance bill on the lifts after 10 years) and getting finance (generally ok if you have 20% deposit, but have 40% just in case)

...and be prepared to wait - it could be 2020 before completion.

The Y-man

 

[RickF]

A work colleague purchased a high rise apartment in the CBD OTP about 6 years ago. Some of the problems he encountered included the bank he was obtaining finance from valued the apartment lower than the agreed purchase price so he had to come up with more $. His bank of choice had already financed its quota of the building so was not willing to expose itself anymore. A number of apartments were on sold due to finance problems and it was a few years before the apartment was valued at the purchase price he paid.
One of his friends also bought an apartment at the same time which he recently sold. It was featured on the tv show "Hot Property" and sold for 25% more than what he purchased for. Considering property doubles in value every 7-10 years and Melbourne has had huge gains in the last 18 months it's not a great return. My ppor has gone up 60% in 18 months less time.

 

[stumunro]

Risk:

Where is Melbourne on the property clock? After a boom how long does it generally take before you see the market moving again?
​

High Density & LVR's - Think about how much the finance market has changed in 12-18mths let alont 5 years​

Lost Opportunity - How long do you have to wait until you realise some profits?​

The only advantages I see in doing OTP in Melbourne right now, is that you have so much money floating around, and you are investing over a 30 year time frame that you don't care about getting results in the short term and are diversifying your portfolio.

If you are only interested in OTP why not try Brisbane where you can buy 2-5 years in a market that has pretty much bottomed out (imo). Look for projects where you can use a deposit bond against some equity in a property, or a 5% deposit. Make sure you have funds to complete the project and at least 3-4 smaller assets in different markets that you can liquidate if need be.

GLLLL

 

[Rodney]

never buy units in the city because they will never go up overall because they can always build more... land is where money are be made.